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Sichuan Changhong Electric Co, China's second-biggest television maker, expects to turn a profit of 500 million yuan (US$60 million) this year, from its first-ever loss in 2004, on rising sales.
Sales this year may rise by 38.9 per cent to a record-high of 16 billion yuan (US$1.9 billion), Changhong said in a statement to the Shanghai stock exchange after its annual general meeting held on Wednesday.
The company, based in Mianyang city in the southwestern province of Sichuan, switched to producing more technologically advanced models such as liquid crystal display and plasma televisions as an oversupply of TVs in the country drove down prices and pared profit margins.
Changhong expects sales in China and abroad to rise this year as it introduces new models of flat panel televisions. Earlier this month, it started selling 55-inch LCD TVs and 65-inch plasma TVs, the largest in China, the statement said. By the end of 2004, Changhong had sold 90 million TV units, ranking second globally, the company said.
The company also aims to lower costs, increase efficiency and economies of scale, and to exit non-core businesses, the statement said.
The company has filed a lawsuit against distributor Apex Digital Inc in the United States to recover US$467.5 million owed. Apex sells Changhong's TVs in the US through outlets such as Wal-Mart Stores Inc.
Changhong posted its first annual loss for the year ended December 2004 after setting aside provisions of 2.5 billion yuan (US$302.3 million) for debt owed by Apex and 1 billion yuan (US$129.9 million) on declining value of unsold inventory and 222.2 million yuan (US$26.9 million) against possible losses in short-term investment. The TV maker reported a 2004 loss of 3.7 billion yuan (US$447.4 million) on sales of 11.5 billion yuan (US$1.4 billion).
On January 6, Changhong spokesman Liu Haizhong said the company received credit lines totalling 12.8 billion yuan (US$1.5 billion) from nine Chinese banks to shore up its finances.
(China Daily July 1, 2005)
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